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  3. 2. 6 months ago you entered into a 1-year forward

2. 6 months ago you entered into a 1-year forward contract to purchase 1 share...

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Finance

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2. 6 months ago you entered into a 1-year forward contract to purchase 1 share of IBM, at a price of $100 per share. Since then, the IBM stock has risen, so that right now (with 6 months left until the maturity of the contract) new 6- month forward contracts on IBM stock are being written with $120 as the contract price. The risk-free rate at which all of us can borrow or lend is 6% per annum (with continuous compounding). Theoretically, what is the minimum someone would have to offer you right now for the forward contract, for you to consider giving it up

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